The contract to run the West Coast main line was initially
awarded to FirstGroup Plc and subsequently withdrawn after the
incumbent, Richard Branson’s Virgin Trains, complained that it
was based on flawed calculations. The process failed because no
one in the department took overall charge, the House of Commons
Public Accounts Committee said in a report published in London
today.

“Given that the department got it so wrong over this
competition, we must feel concern over how properly it will
handle future projects,” including the planned high-speed link
between London and northern England, the panel’s chairwoman,
opposition Labour Party lawmaker Margaret Hodge, said in an e-mailed statement. “The department needs to get its house in
order and put basic principles and practices at the heart of
what it does.”

Britain’s franchising system, under which companies have
competed for routes since the rail network was privatized in the
1990s, was suspended after the flawed award. A report by
Eurostar Group Ltd. Chairman Richard Brown, published on Jan.
10, recommended that the process resume with some modifications.
Virgin was handed an interim deal to run the West Coast route in
December for a further two years.

‘Knock-On Effect’

“If you factor in the cost of delays to investment on the
line, and the potential knock-on effect on other franchise
competitions, then the final cost to the taxpayer will be very
much larger” than the 50 million pounds ($76 million)
estimated, the committee said.

The panel criticized the Department for Transport for
“fundamental errors in calculating the level of risk capital it
would require” from bidders for the franchise and for failing
to heed advice from lawyers and not responding to “early-warning signs that things were going wrong.”

Today’s report comes less than a month after the Commons
Transport Committee said ministers were lied to and must take
their share of the blame for the West Coast franchise process.

The line connects London with Birmingham, Manchester,
Liverpool and Glasgow.